Conscious Capitalism - A Culture of Caring

Editor’s note: Overstock.com chairman Jonathan Johnson delivered the following speech at the Salvation Army’s Annual Silver Bells Gala held in the rotunda of the Utah State Capitol on Dec. 4. He was asked to talk about Overstock’s leadership philosophy.

We all know Dr. Suess’s dreadful holiday story “How the Grinch Stole Christmas.” The Grinch hated Christmas. So, he dressed as Santa and slinked through Whoville stealing every package, tree, ornament and stocking. He then leaves the city, delighted over the pain he will cause children like “Little Cindy-Lou Who, who was not more than two.”

He drives his dog-driven sleigh full of stolen Christmas to the top of Mt. Crumpit. There he pauses ... and puts his hand to his ear. But, he is shocked at what he hears.

Every Who down in Whoville, the tall and the small,

Was singing!

Without any presents at all!

He HADN‘T stopped Christmas from coming! IT CAME!

Somehow or other, it came just the same!

And he puzzled three hours, till his puzzler was sore.

Then the Grinch thought of something he hadn’t before!

“Maybe Christmas,” he thought, “doesn’t come from a store.

Maybe Christmas … perhaps … means a little bit more!”

Tonight, less than a week after Black Friday and just days on the heels of Cyber Monday, I would excuse you if you think that you’ve come to hear the modern equivalent of the Grinch. After all, as the Chairman of Overstock, I spend nearly ten months of the year … starting about the day after Valentine’s Day … figuring out how to make sure that your Christmas comes from a store … specifically, Overstock.com.

On top of that, there is a common refrain in the press that corporations are evil and their executives do all they can to exploit and underpay workers. It is as if all businesses are run by the Ebenezer Scrooge before his sleepless night of visitors.

I’d like to talk tonight about why that should not be and why, in many cases, it isn’t really so.

Conscious Capitalism

In his book “Conscious Capitalism: Liberating the Heroic Spirit of Business,” Whole Foods CEO John Mackey callson business leaders to open their eyes, hearts, and minds to realize “the truth, beauty, goodness, and heroism of free-enterprise capitalism.” He asserts that caring for workers and communities is not a distraction from fiduciary duty, but actually "the best way to optimize long-term profits and long-term shareholder value."

I wholly agree!

Overstock’s Efforts at Conscious Capitalism

Now, I don’t think it appropriate to lecture in a “you should” manner. So, at the risk of bragging, I’d like to share some examples of what “Overstock does” to try to be a responsible corporate citizen – a leader in the practice of conscious capitalism, a company with a soul. I know that many other companies, including those represented here tonight, do just the same.

Valuing and Empowering Employees

First, I have great executive colleagues at Overstock who value and empower Overstock employees. Let me give two examples.

No Executive Bonuses

Several years ago, Overstock had a couple years where sales were lower than as expected and expenses higher than expected. As anyone who keeps a budget knows, that’s not a good combination. So at the end of each of those years, when the board of directors was determining annual bonuses, there wasn’t much to go around. For two years running, my colleagues on the Overstock executive team voluntarily stepped forward to refuse their bonuses so there would be a larger bonus pool for the rest of the Overstock employees. That’s selfless leadership and that’s conscious capitalism.

Employee Empowerment

The Overstock executive team also works to empower and entrust Overstock employees. Let me give an example.

Prior to 2004, Overstock had a thick stack of complex and burdensome procedures that our customer care representatives were to follow. In 2004, we put our most tenacious, customer-centric executive, Stormy Simon, over customer care. We charged she with representing our customers at all times and throughout the company. By the way, I think the most customer-centric executive will almost always be a woman.

Stormy immediately replaced these complex and burdensome procedures with one simple rule: “The customer always deserves justice.” This enunciation of “commander’s intent” (as the military refers to it) empowered our frontline employees to use their best judgment to solve problems. They knew what hill they were supposed to take, but we entrusted them to do it in the way they deemed best.

With this simple change, Overstock went from an also ran customer care organization to number four on the annually released National Retail Federation and American Express customer care list. We’ve remained in the top four ever since. And Stormy Simon is now Overstock’s president.

Empowerment of the individual is conscious capitalism.

Helping Communities

Second, Overstock works to help communities.

Worldstock Fair Trade

Some of you know of Overstock’s Worldstock Fair Trade business that works with artisans from developing countries to sell their handmade products on our site. Since launching Worldstock over a decade ago, Overstock has created jobs for artisans in over 60 countries and purchased over $110 million of product from these third world artisans. Overstock uses any Worldstock profits to fund self-sustaining philanthropic projects such as schools in Guatemala, Kenya, Malawi and Nepal. Worldstock is conscious capitalism making a world of difference.

The Main Street Revolution

Some of you may know of Overstock’s Main Street Revolution, our partnership with small and minority-owned business owners across the United States designed to increase the visibility of these businesses which lack exposure to national markets. Since launching the Main Street Revolution nearly five years ago, we’ve helped Main Street American businesses in 42 states significantly increase their sales. The Main Street Revolution is conscious capitalism providing a step up for small businesses.

Pet Adoptions by Overstock

How many of you know about Pet Adoptions by Overstock? In March of this year, we launched a pet adoption service that uses our technology to match our customers with homeless and abandoned pets from thousands of animal shelters and rescues nationwide. In just nine months, we’ve connected animal lovers with nearly 30,000 homeless and abandoned animals of all shapes and sizes. Pet Adoptions by Overstock is conscious capitalism working to create a world without homelessness for pets.

Support of National and Local Charities

Each year, Overstock supports national and local charities. Tonight, Overstock is pleased to be a sponsor of this Silver Bells Gala for The Salvation Army of Salt Lake City.

Valuing and empowering employees and helping communities creates a vital “culture of caring.” Companies cannot fake this through empty words in a mission statement. To be authentic and felt from both within and outside a company, it has to be a foundational principle, firmly believed and regularly practiced, by those who own and run it.

The Salvation Army

This “culture of caring” has been the underpinnings of The Salvation Army since its inception and it continues today.

Let me mention a little about this great Christian organization. Here is a list of just some of the impressive services it has provided last year in Salt Lake City:

Over 12,000 food boxes for families in need.

Over 33,000 hot meals to local families in need.

Over 750 Thanksgiving dinners to families and seniors in need.

School supplies, including backpacks and binders, for underprivileged children.

Support to individuals who are dealing with addiction and recovery.

In partnership with Rocky Mountain Power, Salt Lake City Water and Questar Gas, utility assistance to families in need.

These are impressive statistics, showing assistance given to thousands. However, transformations are individual and occur one life at a time.

Alex is one such individual transformation. When The Salvation Army of Salt Lake began its relationship with Alex, she was an off-the-wall hyper child who didn’t respond well to instruction or direction. The Salvation Army met Alex when it conducted her grandmother’s funeral since the family knew no one in Salt Lake and had no church it called home. It then connected her family to its meal program. From the meal program, it connected Alex to its percussion club.

At first, Alex couldn't sit still long enough to play a simple rudiment of single stroke or double stroke roll without climbing over or under the pews in the chapel of the building. But it was clear Alex was a bright child. After much patience and persistence from the staff and volunteers, The Salvation Army of Salt Lake has seen Alex through the death of her grandparents, homelessness, and extreme hyper activity.

This Christmas Eve, if all goes according to plan, Alex will be the featured piano player on a very short percussion piece arranged for her by the very instructor she couldn't sit still for just a few short years ago. Her life is being transformed and her joy is infectious!

As you pass the Red Kettles outside the stores this Christmas season, as you consider your end-of-the-year personal donations, and as you consider opportunities for your businesses to practice conscious capitalism, remember the words of Christ recorded in Matthew: “Inasmuch as ye have done it unto one of the least of these by brethren, ye have done it unto me” (Matthew 25:40).

And remember, for those who are hungry and without, sometimes we must make sure that they get Christmas both from the store and from our heart, so that means at least “a little bit more” – as the Grinch discovered.

The Salvation Army is all about selfless sacrifice, empowering the individual, offering a step up and getting people out of homelessness. In the lives of individuals, it makes a world of difference each and every day. Please help it continue to do so.

Regardless of whether, Grinch-like, your “shoes [are] too tight” or your head’s not “screwed on just right,” The Salvation Army gives all of us the much-needed opportunity to grow our hearts “three sizes” this Christmas.